Healthcare organizations are still widely regarded as one of the better performing sectors of the buy-to-let market and at first glance it is easy to see why.
Pegasus Insight’s Landlord Trends Q1 2026 study found that landlords operating healthcare organizations generated average rental yields of 7.6%, compared to 6.3% among non-healthcare organizations. However, revenue alone only tells part of the story. The same research found that HMO landlords owned larger portfolios, generated significantly higher rental income and were more likely to operate as full-time landlords, highlighting how the sector has become increasingly professionalized in recent years.
The broader HMO conversation has changed significantly in recent years. It is no longer simply about identifying a property with strong rental income and securing the financing for it. Estate agents, landlords and lenders are paying much more attention to how these properties function, how resilient the income actually is and whether the investment remains sustainable in the longer term.
At the lender level, we see much more detailed discussions before applications are even submitted.
Questions around licensing, tenant demand, room layouts, EPC requirements, valuation approach and refinancing strategy all become central to lending decisions. In many ways, this reflects how operationally demanding healthcare organizations have become.
Stable occupancy
Licensing requirements vary widely between municipalities, while fire safety regulations, minimum room sizes and planning expectations have tightened in many parts of the market. In addition to higher financing costs, landlords now need assets that can deliver stable occupancy rates and reliable income, rather than having to rely on short periods of rental growth.
The latest Pegasus study illustrates that change very clearly. HMO landlords own an average of 10 properties, compared to 7.6 among non-HMO landlords, while 31% now describe themselves as full-time landlords, compared to 19% of non-HMO investors. Increasingly, this is a market shaped by experienced operators who manage large portfolios as businesses rather than as side investments.
That is why advisors start discussions with lenders much earlier in the process.
From a practical perspective, agents find that early discussions about licensing position, tenant profile, valuation basis and property classification can avoid delays later in the application process, particularly in cases involving limited commercial ownership, multi-unit or multi-room properties.
In many cases, these conversations help landlords secure financing for properties previously outside the standard buy-to-let eligibility.
Part of the evolution within the market is that lenders have adjusted their criteria to reflect how professional landlords now operate.
Level of preparation
We continue to see strong demand across a broad mix of HMO scenarios, from smaller shared homes to larger multi-unit properties within corporate structures. What has changed is the level of preparation. Brokers are increasingly approaching lenders with a better understanding of licensing requirements, valuation considerations and exit strategies before filing a case, often leading to a smoother process and better outcomes for clients.
At the same time, agents are placing increasing importance on lenders who can support specialist property types without creating delays or uncertainty during the application process.
This is particularly relevant in parts of the market where opportunities are developing rapidly and landlords need clarity about financing decisions at an earlier stage.
The valuation alone can have a major influence on the progress of a case. Some healthcare organizations can be assessed using an investment-based approach, while others rely more heavily on comparable evidence.
More providers are now comfortable with higher room counts and non-standard ownership arrangements than was typically the case just a few years ago.
That broader interest will become especially valuable as more landlords diversify their portfolios and move beyond standard buy-to-let investments.
Operational costs are also increasingly becoming part of that discussion. Pegasus Insight found that HMO landlords had average annual portfolio spend of more than £36,000, compared to around £20,500 among non-HMO landlords. Utilities alone accounted for 19% of HMO spending, compared to 5% for non-HMO portfolios, reflecting the additional responsibilities that often come with managing shared housing.
Vacancy periods, tenant turnover, maintenance costs and local competition all play a major role in performance. In some areas, especially where investor interest has increased rapidly, parts of the healthcare market are beginning to experience greater competition for tenants than regional rental data initially suggests.
Therefore, local understanding remains crucial. The strongest performing landlords tend to be those who understand the demographics of their tenants exceptionally well and who structure their portfolios with realistic planning in mind.
That creates an opportunity for brokers to provide much more value than just obtaining financing.
Helping customers understand local demand, lender interest, operational pressures and refinancing considerations has become as important as securing the mortgage itself.
Importantly, healthcare institutions continue to make up a significant part of the private rental sector. Pegasus Insight found that 16% of landlords currently have at least one HMO in their portfolio, with an average of 2.7 HMO properties each.
Healthcare organizations continue to offer attractive opportunities in many parts of the UK market. The difference today is that success is becoming less about finding the highest return and more about understanding what lies behind it. For advisors, this means looking beyond the numbers and helping clients assess whether an investment is suitable for long-term performance.
Martin Sims is distribution director at Molo Finance